Iain Duncan Smith has been criticised for saying some poor parents will spend money on alcohol and drugs rather than their children.

In a keynote speech, Mr Duncan Smith called for a new "multidimensional measure" of child poverty to operate alongside the existing income-based measure, to better reflect the reality of children's lives.

Speaking at the Kids Company charity in London, he argued that there was too much focus on moving families over an "arbitrary poverty line" without a proper understanding of the real problems they were facing.

"For a poor family where the parents are suffering from addiction, giving them an extra pound in benefits might officially move them over the poverty line. But increased income from welfare transfers will not address the reason they find themselves in difficulty in the first place," he said.

"Worse still, if it does little more than feed the parents' addiction, it may leave the family more dependent not less, resulting in poor social outcomes and still deeper entrenchment. What such a family needs is that we treat the cause of their hardship - the drug addiction itself."

But Matthew Reed, the chief executive of the Children’s Society, accused Duncan Smith of peddling a "fiction" on poverty.

“Millions of children up and down this country are living in poverty because their families do not have enough money to live on, access to decent housing or affordable childcare," he said.

"Let’s separate fact from fiction. The vast majority of families in poverty are struggling because they can’t afford the basics - not because they are wasting cash on drink and drugs.

"Most of these children are in low-income working families. We know from our extensive work with families that parents are doing their very best. Every day they are making harsh choices between heating their home, buying school shoes or putting a hot meal on the table.

"Stereotyping children and families struggling to make ends meet is not the answer."

He added: "Cuts to housing benefit, council tax benefit and other key support – together with proposals to cap benefit increases for the next three years - will plunge even more families into poverty. The government needs to take immediate action to end child poverty once and for all."

A survey commissioned by the Department for Work and Pensionspublished today revealed that the public believe a child having parents who are addicted to drugs or alcohol is the most important factor in causing poverty. A child’s family not having enough income was rated as only the fourth most important.

Rhian Beynon of Family Action said: "Iain Duncan Smith must not sideline income poverty. Money matters desperately to the families we support. Having enough income means food on the table and money in the meter.

"We already have a child poverty measure - changing the goal posts will not benefit those families in and out of work struggling to keep their heads above water."

Claudia Wood of the think tank Demos added: "New poverty measures have to be effective at tackling poverty, and a policy that only focuses on the small minority of people with drug and alcohol addiction ignores the majority in need."